fedex said in a statement Thursday The company is set to report a contraction in profits in its latest quarter, with the decline attributed to the shipping giant due to a broader slowdown in the global economy.
In its preliminary financial statements for the quarter ended August 31, FedEx said it generated a profit of $1.19 billion, down 15% from the same period last year. The company also withdrew its earnings forecast for this year. This points to further volatility in the shipping industry.
Factors impacting FedEx’s business included “macroeconomic downturns in Asia and service challenges in Europe,” the company said in a statement. FedEx cited the ongoing war in Ukraine and the continuing impact of the Covid-19 pandemic among potential risks to its future business.
FedEx CEO Raj Subramaniam said in a statement: “While we are responding quickly to these headwinds, our first quarter results are below expectations given the speed at which the situation is changing. ‘ said. The company did not immediately respond to a request for comment.
To combat the slowdown, FedEx said it was cutting flights, curtailing Sunday operations in some locations, freezing jobs and closing more than 90 locations. FedEx also said it would eliminate five headquarters as part of a broader review of its real estate holdings.
The FedEx results are a bleak sign for the U.S. economy, sending mixed signals to analysts trying to diagnose its health. Demand for workers remains strong as consumer spending increases in sectors such as travel and restaurants. Supply chains have been particularly sluggish as the shipping industry grapples with the ripple effects of the Covid-19 pandemic.
FedEx said it expects business conditions to deteriorate next quarter. As a result, the company said it will cut capital expenditures this year by about $500 million from previous estimates.
FedEx shares fell about 15% in after-hours trading following the company’s announcement.